Gambling figures prominently in this story, but this isn’t a story about gambling. It’s a story about an administration misusing its power to benefit its friends. It’s a story about the corrupt purchase of our government.
For half a century, Democratic and Republican administrations have interpreted the Wire Act, passed in 1961, as prohibiting the sale of lottery tickets by phone or wire, and in more recent years over the Internet. That changed on Christmas 2011, when the Obama/Holder Department of Justice reinterpreted the Wire Act. The DOJ ruled that the Wire Act allows lotteries to sell tickets online. The DOJ did not consult Congress. It held no hearings and did not seek comment from the small businesses that currently sell lottery tickets and will be impacted by the reinterpretation. Justice just changed the law by decree on a holiday, when no one was paying attention, overturning decades of precedent.
DOJ’s reinterpretation opens up the floodgates for states and now foreign lottery operators to sell tickets to anyone with a credit card and a connection to the Internet. It will make it more difficult for states to police lotteries and keep them fair and clean. Well, as fair and clean as a hidden tax on people who failed at math and do not understand gambling odds can be. The reinterpretation does something else, too: It benefits President Obama’s donors and two key states.
Among those beneficiaries are Scientific Games and GTech. Shares of both companies jumped dramatically on the news of the Justice Department’s reinterpretation. According to Shay Sayre and Cynthia King’s book Entertainment and Society: Influences, Impacts and Innovations, GTech is a wholly owned subsidiary of Lottomatic, a foreign company that holds the license for Italy’s national lottery. GTech and Lottomatic together have captured 63 percent of the world’s lottery business. In the book, Sayre and King write that GTech’s history is riddled with controversy, including an attempt to bribe British billionaire Richard Branson. These are .0001 percenters at the heart of this story.
GTech and Scientific Games both have strong connections to the Democratic Party, according to Federal Election Commission records. Scientific Games’ chairman is Lorne Weil. According to the FEC, Weil has given more than $22,500 to political campaigns and committees since 2008, with over 80% of that sum going to Democrats. Jaymin Patel is president and CEO of GTech. Patel has donated $9,300 since 2008, with over 90% of his generosity going toward Democrats.
So we have two companies whose leaders donate heavily to the Democrats, benefiting from a Democratic administration’s reinterpretation of the Wire Act, and one of those two companies has a history of corruption. But the ultimate beneficiaries of lottery systems are state budgets, right?
Two states seem to have gotten the jump on the other 48. They just happen to be Illinois, home state of President Obama, and Delaware, home state of Vice President Joe Biden. How did that happen? Illinois and New York, two states addicted to government spending and apparently incapable of living within their means, specifically asked for the Wire Act’s reinterpretation in 2011. And they got it. Delaware was poised to get in on the action early.
From a distance, the entire reinterpretation appears to be an insider deal: CEOs buy access with their donations, and states buy access with their politics and proximity to the administration. That the convenient reinterpretation of a fifty year old law coincides with so many hostile actions the Obama administration has taken against Republican states — suing Arizona for enforcing its border, smashing Texas’ energy industry via the EPA’s MACT rule and cross-border pollution rule — is too obvious to ignore. This administration is corrupting the rule of law, and in the case of the Wire Act, using the very department that is supposed to be the impartial guardian of our laws to do it.